Medicines prices: measurement and findings in countries

1
Medicines prices measurement and findings
in countries
Richard Laing PSM - WHO Gilles Forte TCM -
WHO Margaret Ewen HAI - Europe
2
Wider problems of medicine prices

• Medicines have variable and often high prices,
  and are unaffordable for large sectors of the
  global population and a major burden on
  government budgets
• Burden falls directly on most patients in
  developing countries but little is known about
  the prices people pay and how these prices are
  set, from the manufacturers selling price to the
  patient price
• Trade agreements can severely affect the price
  and availability of medicines
• Many developing countries do not have pricing
  policies
• But, the prices of medicines are well above their
  production
• costs so there is great scope for reductions

3
WHO/HAI Project on Medicine Prices

• Developed a methodology for collecting and
  analysing the prices of medicines, affordability,
  availability and component costs in various
  sectors and regions in a country
• Data freely accessible on HAIs web site so
  international price comparisons are possible
• www.haiweb.org/medicineprices
• A monthly monitoring tool, measuring prices and
  availability, is currently being developed to
  complement the survey tool

4
Survey tool technical basis

• Systematic sampling of medicine outlets in at
  least 4 areas, minimum of 10 pharmacies per area
• Prices of 30 pre-selected commonly used medicines
  in at least public and private sectors
• Predetermined dose forms strengths,
  recommended pack sizes
• Supplementary lists encouraged, adapted to local
  needs
• Prices of innovator brand and lowest price
  generic are sampled
• All components of price from manufacturer to
  retailer identified
• Affordability assessed for ten pre-selected
  courses of treatment
• Excel workbook, for data entry and analysis,
  accompanies manual

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Core list of medicines for price comparison
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How prices are expressed

• Median price ratio ratio of median unit price
  by an international reference price (converted to
  local currency)
• International reference price
• external standard for evaluation of local prices
• recommend using Management Sciences for Health
  (MSH) International Drug Price Indicator Guide
• recent procurement prices offered predominantly
  by not-for-profit suppliers to developing
  countries for multi-source generic equivalent
  products. Median unit price is used.
• web-based, prices relatively stable, updated
  annually
• can select another source such as Australian PBS

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Price components

• Identified by tracking actual prices back from
  the patient price to the manufacturers selling
  price/CIF price
• Method involves interviews with pharmacists,
  wholesalers, importers, Ministry of Health,
  Ministry of Trade, Customs office, local
  manufacturers. Note - companies are rarely
  willing to divulge their selling prices
• Types can include insurance freight costs,
  port inspection charges, handling charges,
  import duties, import, wholesale retail
  mark-ups, VAT/GST, dispensing fees
• The amount of charge is often variable depending
  on whether the medicine is
• Imported or locally manufactured
• Innovator brand or generic
• Sold in the public or private sector

8
Tool for routine monitoring of price
availability

• Simple, inexpensive, standardised method to
  inform consumers purchasers about current
  prices, availability and patterns of price
  changes
• Data collected for 10 medicines each month, on a
  3 month rotation, in sentinel public and private
  sector pharmacies (40 of each)
• Simple and sustainable method of data collection
  eg telephone, fax, email, post
• Medicines monitored based on core list but
  adapted to local needs, only data for lowest
  priced product collected
• Price variations compared to basic consumer
  commodities eg dozen medium eggs

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Surveys underway or completed

• Middle East Lebanon, Jordan, Kuwait, Syria,
  Sudan,
• Africa Tunisia, Algeria, Morocco, Mali, Chad,
  Uganda, South Africa, Tanzania, Kenya, Ethiopia,
  Zimbabwe, Mozambique, Nigeria, Ghana, Cameroon,
  Senegal
• Asia/Pacific Pakistan, Indonesia, Philippines,
  Malaysia, Fiji, China (Shandong), India - West
  Bengal, Haryana, Karnataka, Maharashtra (2),
  Chennai
• Central Asia Mongolia, Kazakhstan,Tajikistan,
  Kyrgyzstan, Uzbekistan
• Other Peru, Dominican Republic, Bosnia
  Herzegovina
• 41 surveys in 36 countries
• Note some data in this presentation is
  preliminary

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Medicines prices survey process and use of
evidence

• Support to carry out surveys planning, data
  collection, cleaning, analysis, report writing,
  stakeholders workshops etc.
• Pre- and post- survey workshops held for key
  survey personnel in the Middle East, Central
  Asia, Africa (Francophone Anglophone), Asia
  Pacific and India
• Next phase Caribbean and Latin America
• Collaboration with countries for implementation
  of key policy recommendations based on surveys
  findings

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Information obtained

• Availability of medicines
• Price Comparisons Innovator Brand and Lowest
  Priced Generics
• Price Components
• Affordability of medicines

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Availability

• Many examples where the availability of expensive
  innovator brands was high while the availability
  of cheaper generics was low

13
Brand vs generic prices in relation to
international reference price forciprofloxacin
500mg tabs, private pharmacies
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Brand vs generic prices in relation to
international reference price for captopril 25mg
tabs, private pharmacies
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• These examples show
• 1-Prices of originator brands are considerably
  higher than the prices of their lowest priced
  generic equivalents
• this is a problem for patients if
• the generic equivalent is not available
• the medicine is patented and faces no competition
• the medicine is prescribed by brand name and
  substitution is not permitted
• 2-In some countries lowest priced generics are as
  expensive or more expensive than originator brand
  

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Manufacturers selling price vs Add-on costs
(cumulative) in private sector
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Add-on component costsshown as actual costs,
private sector
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Add-ons do they matter?

• add-ons vary both in type and quantity
• e.g. in Khyrgyztan lt40, in Peru gt 100
• pharmacy profits largely based on mark-ups
• variable range from 15 to 55 - in one African
  country approx. 100
• governments in some countries apply high import
  taxes and VAT
• Tajikistan - removing taxes duties would
  reduce total additional costs from 82 to 32
• as most add-ons are applied as percentages, the
  higher the manufacturers price, the higher the
  price to the patient

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Affordability days wages, lowest paid
unskilled govt. worker, needed to buy 30 days
ulcer treatment with ranitidine 150mgx2/d
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Affordability days wages, lowest paid
unskilled govt. worker, needed to buy 30 days
ulcer treatment with omeprazole 20mg/d
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Medicines surveys in 8 countries in Africa
Ethiopia, Ghana, Kenya, Nigeria, South Africa,
Tanzania, Uganda Zimbabwe
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Affordability

• Medicines were generally unaffordable for a large
  proportion of the population - particularly for
  chronic diseases
• Many familys incomes are lower than that of the
  lowest
• paid government worker and hence these medicines
  are probably
• unaffordable to the majority of the population
  in most the
• countries.

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Common recommendations from the countries

• Need to have a policy on the pricing of medicines
  which ensures price transparency, price control
  and enforcement
• Price transparency through ongoing monitoring and
  publication of pricing and availability
  information are important to reduce price
  variations as well as to monitor the effects of
  interventions
• Sharing of price information between countries is
  an important tool to influence policy change
  within a country as well as to be able negotiate
  better prices - especially within sub-regions

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• Increase consumer awareness and acceptance of
  good quality generic equivalents
• Develop and enforce regulations for generic
  substitution and incentives for generic
  prescribing and dispensing in all sectors
  explore relevance of local production of generic
  medicines
• Public sector to focus on initiatives to improve
  availability including better quantification and
  demand driven supply systems
• Removal of all taxes and tariffs including VAT on
  medicines, especially essential medicines
• Governments to use the flexibilities of TRIPS
  Agreement to introduce generics while patent is
  in force